Sub-2 Deal or no deal?? Help

[Ryan Reed]

Hey everyone,

I have a seller that is willing to let me take the house sub-2 and take a promissory note for $10k to be paid when the house sells. I called the lender to fill out the loan information sheet and found out all the info but now am unsure about the deal.

I knew that there was a $50k loan and the property is worth about $80-90k. The mortgage company says that the principal balance is $49,479 and the loan is not current. The reinstatement amount is $25,927.50! and the verbal payoff amount is $69,016. I planned on wholesaling this contract for $5k to another investor, but now I am unsure where to go from here. Any help is appreciated.

Thanks

[Colin Bochicchio]

Ryan,
This does not sound like deal even subject 2.
One thing is one or even 2 months behind but 25K it sounds like he did not pay his property taxes so you need to do due diligence on this.
I would verify the appraisal and you did not talk about repair or rehab work that may be needed and why he is behind.
As to the 10 K promissory note how is it that he claims 10K he should be paying you to take if off his hands or maybe I read that wrong..??

How will you make 5K assigning the contract since investors want properties wholesale I do not see any cushion for an investor to profit.( No Equity to speak of)
For the investor between marketing and closing costs there is no profit margin there or very little.
What is the market rent ARV for the property so that way you know the rental income for a buy and hold investor so your numbers crunch since if it cash flowed my guess is you may have a investor who does those type deals if you market it that way.

Another potential problem if you contract is not right and you take on the liability you could be liable for the payments so do NOT make his problems your own..

Walk away no deal in my view..

Call me if you like to discuss...